Chapter 1-3 Flashcards
(27 cards)
Scarcity
The fundamental problem in economics. It is driven by unlimited wants with limited resources.
Wants
The things that we don’t need.
Needs
Things are that are necessary to survive.
Goods
The items being produced
TINSTAAFAL
There is no such thing as a free lunch
What will be produced?
Describe the question
What products are going to bring the most profits in.
How will the goods be produced? (Describe this question)
What is the fastest and most efficient way to get the most products produced in the least amount of time.
Who will get the goods produced? (Describe the question)
Who has the money to buy the things being produced. Or who will benefit the most from getting the products.
Opportunity costs
The most valued alternative when you give up when you make a choice.
Trade-offs
More of something that means less of another.
Production possibilities curve
Shows all different possibilities of production.
Command economy
An economic system characterized by a central authority that makes most of the major economic decisions.
Socialism
An economic system where the government owns some factors of production and has a role in what is produced.
Market
A meeting place where buyers and sellers interact in to determine the price/quantity of and economic product.
Market economy
This is where the what, how, and for whom questions are answered
Capitalism
An economic system where private citizens own and use the factors of production for their own wealth
Communism
When everybody is equal
Karl Marx
Father of communism
Adam Smith
Father of capitalism
GDP
Gross domestic product
GDP per capita
Takes the gross domestic product and divides it by the number of people living there
What makes a mixed economy a mixed economy?
A mixed economy is when the people own stuff and make decisions alongside the government
Paradox of value
This is when different products mean different things to you.
What is the difference between a factor market and a product market?
Factor markets focus on the production process and the product market focuses on the final product.
